Financial Crime World

Switzerland’s Fight Against Money Laundering and Terrorist Financing: Strengthening the System

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A recent report by the Swiss Federal Council has highlighted the risks of money laundering and terrorist financing in Switzerland, emphasizing the need for greater vigilance and cooperation among public and private sector players. The report identifies several measures to strengthen the system and prevent these illicit activities.

Intensify Dialogue with Private Sector

The report recommends intensifying dialogue with the private sector about the risks of money laundering and terrorist financing, as well as continuing data collection and analysis from federal and cantonal criminal prosecution authorities.

Develop and Systematize Statistics

  • The public and private players involved in combating money laundering and terrorist financing should further develop and systematize statistics on these cases using quantitative methods.
  • This will help identify trends and patterns, allowing for more effective prevention and detection of these illicit activities.

Perform Risk Analyses

  • Risk analyses are essential to identifying vulnerabilities and developing effective strategies.
  • The report recommends performing risk analyses to identify areas where improvement is needed.

Improve Real Estate Register

  • The national real estate register accessible to federal authorities should be rapidly introduced to reduce the identified vulnerabilities in this sector.
  • This will help prevent money laundering and terrorist financing activities through the manipulation of property transactions.

Enhance Supervision of Foundations

  • The Federal Supervisory Board for Foundations should be strengthened and provided with additional resources to reduce the risk of foundations being used for money laundering and terrorist financing purposes.
  • This will ensure that foundations are transparent and accountable, reducing the potential for misuse.

Implement Customs Warehouses Strategy

  • The Federal Council’s strategy on customs warehouses should be put into practice by implementing recommendations from the Swiss Federal Audit Office and establishing a legal framework at ordinance level.
  • This will help prevent money laundering and terrorist financing activities through the manipulation of customs transactions.

Accounting Rules for Raw Materials Extraction Companies

  • Proposals in the preliminary draft of the amendment to the Swiss Code of Obligations (law on companies limited by shares) concerning accounting rules for raw materials extraction companies should be incorporated into the future bill.
  • This will help prevent money laundering and terrorist financing activities through the manipulation of financial transactions.

Sectoral Reports

The report also highlights several sectoral reports that provide targeted analysis of money laundering and terrorist financing risks in non-profit organizations, commercial legal entities, and crypto assets and crowdfunding.

Non-Profit Organizations

  • A report published in 2017 found that non-profit organizations operating in or near conflict zones are at a higher risk of being misused for terrorist financing purposes.
  • The report recommended extending the obligation to enter associations in the commercial register to include associations with a heightened terrorist financing risk, as well as maintaining member lists for registered associations.
  • A report published in 2017 examined the money laundering risks posed by commercial legal entities and found that foreign companies carry a significantly higher risk of money laundering due to their involvement in international business and financial cycles.
  • The report recommended strengthening due diligence and reporting obligations under the Anti-Money Laundering Act.

Crypto Assets and Crowdfunding

  • A report published in 2018 investigated the risks related to crypto assets and crowdfunding, highlighting the need for greater vigilance and cooperation among public and private sector players.
  • This will help prevent money laundering and terrorist financing activities through the manipulation of cryptocurrency transactions and crowdfunding platforms.

By implementing these measures, Switzerland can strengthen its fight against money laundering and terrorist financing and protect its financial system.